It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Tuesday, June 06, 2023
PRIVATIZATION
Kenya Seeks to Generate $10B Leasing Five Ports to Private Investors
Mombasa is losing volumes to competition and bottlenecks (file photo)
Authorities in Kenya are seeking private investors to take over the operations and management of five critical ports, a development aimed at bolstering the competitiveness of the maritime sector and generating $10 billion for the financially beleaguered government.
Kenya has historically been the gateway to the East Africa region through the port of Mombasa but is facing increasing competition from neighboring Tanzania. The government is reviving a previously dismissed plan to concession sections of Kilindini Harbour, Dongo Kundu port, Kisumu port, and Shimoni Fisheries port to investors through a public-private partnership.
Through the Kenya Development Corporation (KDC), a state-owned development authority, the Kenyan government also intends to concession the Lamu port which continues to be a laggard with less than 25 ships docking at the facility in three years of operation. During the period, the port in which Kenya invested $367 million to build the first three berths and which was touted to be a major transshipment hub when it was commissioned in May 2021, handled less than 2,500 TEU.
In order to inject new life into the Lamu port and unleash the potential of the other four ports the Kenya government is renewing the plans to bring on board private investors to operate the facilities. Included in the proposal is the Kisumu port which they believe can become a major petroleum products transportation hub.
KDC has prepared a detailed prospectus to attract private investors to take up the operations and management of the ports with the Kenya Ports Authority and the Lapsset Corridor Development Authority being designated as the implementing agencies of the planned leasing.
“The ports are confronted with the challenge of congestion and, therefore, higher dwell times for cargo. The ports will be leased/concessioned to private operators with a landlord-type port management system,” said KDC in the prospectus.
The decision by the current Kenyan administration of President William Ruto to bring on board private investors represents a change of heart after similar plans by the previous administration was abruptly shelved after sparking controversies. There had been allegations of illegalities, with global ports operator and logistics giant DP World caught in the middle.
In the latest attempt, Kenya is not only hoping to attract private operators to take over the operations and management of the five ports but is also seeking $304 million worth of private investment for the facilities.
Part of the investments will be directed toward the development of agribulk and liquid bulk terminals at the port of Lamu as well as storage tanks to enhance its competitiveness thus attracting more shipping lines. In its prospectus, KDC is suggesting the potential increase in the port’s cargo volumes by seeking private investments in the agribulk and liquid bulk terminals that are set to cost $210 million and $94 million respectively.
“Agribulk import demand at the port of Lamu is projected to increase from 547,000 tonnes in 2023 to 3.3 million tonnes in 2045. The investment will enable facilitation of import and export to meet the demand of grain requirements, creation of job opportunities,” said KDC.
The agency is also seeking investments in storage tanks at the port at a cost of $30 million to meet the expected demand for refined oil product imports and crude oil exports. They project volumes to increase from 6.8 million tonnes in 2020 to 19.3 million tonnes in 2045. Refined oil imports are forecast to increase from 395,000 tonnes in 2023 to 2.6 million tonnes in 2045, while crude oil exports are expected to increase to three million tonnes.
The Kenyan government contends that leasing the ports to private investors will enhance the competitiveness of the northern corridor that serves not only Kenya’s hinterlands but also landlocked neighboring countries of Uganda, Rwanda, Burundi, South Sudan, and parts of the Democratic Republic of Congo (DRC).
Increasing bottlenecks on the corridor that has been the main gateway to East Africa through the port of Mombasa have in recent times come under intense competition from the central corridor in Tanzania as more importers and exports opt to use the port of Dar es Salaam.
Kenya National Bureau of Statistics data shows the volume of cargo handled by Mombasa port dipped for the first time in five years with total cargo dropping to 33.74 million metric tonnes in 2022 from 34.76 million tonnes the previous year. The 2.9 percent drop pushed the volumes to the lowest levels since 2018 when it stood at 30.92 million tonnes.
During the 2021/2022 financial year, Dar es Salaam port recorded a 10.3 percent increase in throughput handling 17.85 million tonnes, up from 16.19 million tonnes in the previous financial year, according to Bank of Tanzania data.
The fact that Kenya is losing its edge to Tanzania is evident after Dar es Salaam port overtook Mombasa port in the latest World Bank ranking of the world’s most efficient ports. The 2022 Container Port Performance Index ranks Mombasa at position 326 against Dar es Salaam at position 312 from a total of 348 ports used in the survey.
EU Seeks to Expand Ship Inspections for Safety and Pollution
EU proposed to expand port state controls to enhance safety and prevent against pollution (file photo)
The European Commission presented five legislative proposals which it says are designed to modernize EU rules on maritime safety and prevent water pollution from ships. According to legislators, the new rules would provide new tools and align EU rules with international regulations while increasing the authority of port state controls and expanding efforts to cover commercial fishing.
It was highlighted that maritime safety in EU waters is currently very high with few fatalities and no recent major oil spills. The legislators however said that there are over 2,000 marine accidents and incidents reported each year and the dangers are rising. They are seeking to modernize and expand the current controls while expanding the mandate of the European Maritime Safety Agency (EMSA) to meet emerging challenges and enhance maritime safety.
Three out of the five proposals focus on modernizing and improving maritime safety rules. The focus is on Port State control and maritime accident investigations, seeking to strengthen the enforcement of the rules to reduce incidents and accidents. Port State control would be extended to cover additional international rules, such as new Conventions on ballast water and sediments and the removal of wrecks. The proposal also updates the way ships are targeted for inspection, to reflect new requirements and will attach more importance to the environmental-related performance and deficiencies of ships, in determining their risk profile.
Other changes will further improve member states' capacity to detect and correct a lack of compliance with safety or with environmental and pollution prevention rules and standards. The proposal calls for increased information-sharing between flag states on the results of inspections they carry out and compliance issues in general. National accident investigation bodies would also receive further support from EMSA.
One of the biggest proposed changes would seek to extend port state control and accident investigation to fishing vessels. The legislators highlighted the significant safety concerns among fishing boats saying persist that member states could choose to apply port state control for fishing vessels calling at EU ports that are over 78 feet long. Further, for the most serious accidents involving smaller fishing vessels measuring less than 50 feet, member states would be required to report and screen the accidents for possible lessons to be learned.
The rules governing illegal discharges would also be expanded to cover a wider range of polluting substances. In addition to illegal discharges of oil and noxious liquid substances, which were covered under existing rules, the Commission proposes to also include discharges of harmful substances carried in packaged form, sewage, garbage, as well as discharge waters and residues from Exhaust Gas Cleaning Systems (scrubbers).
The role of EMSA would also be amended to provide new authority and to assist in the implementation of the EU’s efforts addressing not only safety but also pollution, environmental protection, and surveillance. The Commission will also rely on EMSA's support when implementing the FuelEU Maritime Regulation and extending the EU Emissions Trading System to maritime transport.
The proposals will now be considered by the European Parliament and the Council in the ordinary legislative procedure.
PRIVATIZATION
U.S. Navy Should Pursue Commercial Containerships
Procuring Modular Containerships for Flexible and Affordable Capability
The U.S. Navy should pursue commercial containerships and compatible containerized mission systems. These ships and systems will allow the U.S. Navy to rapidly field new technologies, expand the maritime industrial base, grow the ranks of experienced seafarers, and provide surge capacity in times of national need. Containerships, as well as combination containership/roll-on roll-off vessels (ConRo), would allow the U.S. Navy to affordably procure a large number of hulls compared to typical naval warships, and open options to augment a range of missions. These ships would allow conventional combatants to focus their high-end capabilities on the highest priority missions, while augmenting many of their capabilities with containerized support. Containerships can act as valuable force multipliers and retain a significant amount of modularity in a time when conventional naval force structure is at risk of falling behind the rapidly evolving state of capability.
Containership Capabilities and Modularity
Because even a relatively large mission payload would still be a small fraction of a containership’s capacity, there would be plenty of space for systems that feature typically inefficient form factors. Relieved of the need for the most optimal and efficient space and weight arrangements, there are options for affordability and capability that might otherwise be challenging on a conventional combatant where weight, volume, and complexity are highly constrained and deeply embedded into the hull design.
Containerized systems would not necessarily be restricted to a single standard size so long as they utilize standard interfaces. The ability to vary from specific limits and how commercial containerships are not as weight limited as conventional warships are important distinctions from the mission module approach of the Littoral Combat Ships (LCS). With the LCS program, the design was driven in a direction that did not allow for wide variance in module sizes without significant impacts to performance. By comparison, a commercial containership such as the U.S.-built Aloha-class can carry nearly 200, 40-foot containers in a single layer on deck, representing an area equivalent to more than four Independence-class LCS mission bays. Given deep container holds below deck, additional space between containers, and the ability to stack containers, the actual usable space is even greater.
Utilizing containerships to carry weapons, sensors, and other payloads provides for unique mission capabilities. Drop-in modules with integrated hatch covers could replace the standard container bay covers, and allow containerships to hold MK41 VLS tubes. Deck-mounted launchers for Naval Strike Missiles (NSM), Harpoon, and others could be mounted using standard interfaces. Similarly, SeaRAM, RAM, MK38 25mm guns, minelaying equipment, and other weapons stations could be deployed. And simply offering a large amount of seaborne flattop space could allow for conventional ground systems to be fired from the deck, such as missile artillery systems, Patriot batteries, NMESIS launchers, and the Army’s forthcoming SM-6 and Tomahawk launchers.
Power and cooling would be provided by onboard interfaces, with the aforementioned Aloha class having ~8 MW of installed generation. Further augmentation could be provided on an as-needed basis by containerized generators and cooling units that would be cited near their users. Such units are readily available on the commercial market. Where systems require particular power quality or voltages, specific interface equipment would be incorporated.
In additional to weapon systems, any components that were built with compatible interfaces could be fielded. An obvious option would be sensors such as mobile radars or containerized versions of shipboard systems. With the large holds available and the typically sizeable tankage capacity of commercial containerships, underway replenishment gear could also be carried and the ships could augment the existing logistics force ships. There would also be potential to procure geared containerships, such as those with their own cranes, to allow for self-unloading, or facilitate the containership as an at-sea transfer point for other ships in permissive seas. These cranes could be designed-but-not-fitted in a practice already utilized in the commercial industry to allow conversion between ungeared and geared containerships. Those cranes, or other mission loadout cranes, could provide for VLS and other resupply not possible with the present Combat Logistics Force. For any ConRo ships purchased, these could augment the existing Roll-on/Roll-off (RoRo) ships in DOD inventory. This would potentially include making use of existing cargos and capabilities of those ships such as the Modular Causeway System (MCS) for establishing links to the beach in areas without developed port facilities.
Another usage would be as motherships for manned and unmanned aviation and small boats, with aircraft-rated containers allowing for the deployment of a large number of small UAVs or rotary aviation. Given the hundreds of tons of containers routinely loaded onto container hatch covers, this would not be a challenging design. The interior holds would provide further space for fuel while munitions, spares, and workshops could be provided on the deck. For larger unmanned assets, such as LUSV and MUSV, these ships could serve as at-sea service stations and as command nodes in certain areas.
Containerships could also make major contributions toward deception and challenging adversary decision-making. The usage of chaff, flares, decoy dispensers, and radar reflectors could be utilized to not only reduce the likelihood of a hit, but to also confuse opposing scouting efforts and complicate the battlespace with more signatures. Conventional warships typically field relatively few decoy dispensers, and a single containership deploying numerous decoys could make a major difference in shaping the electromagnetic footprint of a force on a theater-wide level. Furthermore, the suspected presence of these ships and their significant modularity could force adversaries to dedicate greater time to scouting and analysis in an attempt to understand the capability and operational roles of the containerships.
Survivability
Aside from the modules, the platforms would not be designed to military standards given how the added costs and complexity would negatively impact affordability. Containerships would not offer a highly survivable asset and would not be one-for-one replacements for conventional combatants. They would not be suitable for independent operations in high-threat environments and would not be able to keep up with carrier groups executing fast transits. They would not be suitable for surface action groups and formations that prioritized sustained speed, including actions deep within hostile Anti-Access/Area Denial (A2AD) zones. These should be acceptable tradeoffs for these ships given their cost and roles.
Instead, these ships would be used in concert with conventional combatants, often in rear areas, or in ways to minimize their likelihood of being engaged. More risky missions could be undertaken when required and may even be desirable in situations where other slower or vulnerable ships were included in the formation. This could include some U.S. and allied amphibious forces, auxiliaries, and even tankers and supply ships operating in support of particular operations. These ships could also provide support to forces operating in adjacent higher-threat areas, where those forces could provide targeting to containerships to leverage their magazine depth and long-range fires.
The ship would not be expected to fight through a hit, particularly against purpose-built anti-ship missiles or torpedoes. However, the containership’s sheer mass would provide a degree of resilience even without shock grade systems and conventional warship damage control capability. This would particularly be true if the hold space without mission equipment was filled with empty containers. The sheer size of the ship would on its own likely provide a degree of resilience, especially against smaller warheads such as the YJ-83 or similar weapons. These small warheads have proven to be relatively effective in achieving mission kills against small combatants, but multiple hits are likely required against larger ships. The flexible configuration of containerships will challenge the ability of advanced missiles to employ aimpoint selection capability to maximize lethal effect, which is much easier against conventional warships with the unchanging locations of their critical spaces, such as magazines and launch cells. Even if a mission kill is suffered, the prevention of total ship loss may allow for undamaged modular combat systems to be salvaged and retrieved. Equivalent systems may have otherwise been lost on conventional warships, whose combat systems are deeply integrated into their hulls.
Weapons targeted at naval formations featuring these containerships may be drawn toward the larger vessels, which enhances the survivability of the conventional warships that would suffer greater casualties and losses of capability from taking hits. Containership crew safety could be increased by utilizing armored command modules that serve as protected locations to command the ship. Containerships could feature multiple command modules to offer redundancy and resilience. Armored crew modules would not work for every mission set, such as flight operations where deck crews would be needed at times, but would allow for a degree of safety during an attack.
Procurement
The U.S. shipbuilding industrial base has shrunk greatly since its peak in World War II. The remaining yards have operated in a constrained environment for years but still produce ships for the Jones Act market, even if they do not have the ability to compete with the likes of South Korea, Japan, or China on total tonnage. While their costs are greater than foreign yards, a U.S.-built containership is still considerably more affordable than military ships.
The two-ship Aloha class was ordered from Philly Shipyard (formerly the Aker Philadelphia Shipyard) for $418 million in 2013 (around $512m in 2022 dollars), representing a unit cost of around $250 million. Matson paid a similar amount for their two Kanaloa-class ConRo ships from General Dynamics NASSCO, which entered service starting in 2020. If purchased in sufficient numbers, a containership or ConRo unit cost could be even less. Matson placed a 2022 order for three additional Aloha-class ships for $1 billion, an average unit price of about $333 million. By comparison, the FY10 LCS block buy featured a unit cost of about $440 million (or $590 in 2022 dollars). FFG 62 frigates are expected to cost about $1.1 billion per ship, LPD 17 Flight II ships are estimated at about $1.9 billion, and T-AO 205 oilers at about $680 million.
Procurement of these containerships would not necessarily be intended as an alternative to current planned battle force procurements. Resource balancing will inevitably require budgetary trades as any Navy acquisition dollars spent on containerships would invariably impact potential spending on additional combatants. That said, there are industrial base limitations and only so many destroyers, frigates, and amphibious ships can be ordered per year on a sustained basis in the near-term.11
Containerships could be procured outside the traditional warship shipbuilding industrial base and offer opportunities. Adding containership production would be more affordable and adds production in currently underutilized domestic shipyards. Philly Shipyard’s only current government shipbuilding project is the replacement maritime academy training ships, National Security Multi-Mission Vessels (NSMV), via Tote Services.12 The first two vessels are being procured for about $315 million. Smaller shipbuilders that would struggle to produce a conventional warship would potentially be competitive for containerships contracts. Furthermore, mission packages could be competitively awarded separately from containership procurement.
If about $500 million per year was made available on a sustained basis, the Navy could likely order two containerships annually, not accounting for lead ship, mission module, and initial program stand-up costs. Since the program would utilize a relatively simple commercial design and leverage industry standards, the design would not require commonality when built at multiple yards. Of course, components such as main engines and generators would be advantageous to be common across all purchases. Study and analysis would be required to identify if the cost to acquire a common design can be offset by commonality savings.
Assuming a procurement rate of two ships per year, the Navy could have operational ships within five years from first delivery. The Navy could additionally purchase or lease used containerships to begin experimentation immediately while standing up the program. A steady ship order volume would also provide for improved stability of the commercial industrial base, lower unit costs, and potentially stimulate additional orders as costs decrease and expertise improves. Further positive impacts to the overall shipbuilding industrial base, to include military production, may also result from increased supplier stability and demand. Derivative hulls could also be explored as the basis for other auxiliary ships.
As the Navy grows its containership inventory and develops experience, many non-military containerships could be leveraged for operations and provide a vital source of surge capacity if needed. This could include wartime purchases of idle containerships and using already built mission systems.
As capabilities are upgraded, exchanged for new systems, or made obsolete, they would not require taking the ship itself out of service. A 30-year-old MK41 VLS or a 10-year-old radar might not be advisable to transfer and permanently install in a newer combatant with its full service life still ahead of it. The short-term nature of installing modular systems onto containerships would allow maximum service life to be extracted from the modular systems irrespective of the hulls they are installed on.
Personnel Configurations
The operating profile for these containerships could broadly follow several approaches: Navy-operated with uniformed sailors, Military Sealift Command (MSC) contract mariners, and through a ship-as-a-reservist approach. Balancing these approaches would require experimentation of how to best integrate them into the force.
The first approach would be the same as with current auxiliaries. The ships would be operated by the government and move government cargos. They may or may not carry weapons or sensors in this role, but could be loaded with such systems when desired for operations or exercises. When carrying weapon systems, Navy crews come aboard to operate. This approach would allow more permanent ship changes, including installing sensitive C4I systems, as the ships could remain under constant direct government control.
An alternative approach would be to employ a ship-as-a-reservist role where the containerships would be U.S.-flagged and operated commercially. The operating company could receive these ships at a discount in exchange for an agreement that they be provided in the event of national need and for a set number of regular training and experimentation periods. There may be value in Congressional action to approve a special approach under the Federal Ship Financing Program (Title XI) or through a new bill to reflect the outlined operational approaches.13 This would differ from typical subsidized purchases in that the ships would be expected to be used by the Navy on a semi-regular basis for exercises and other operations. In this approach, the shipping company would be responsible for most of the normal operating costs, while having benefited from a greatly reduced capital investment. The Navy would carry some or all of the cost of acquiring the ship and may award a fee to the operating company for use of the ship during the agreed upon periods each year to offset the lost revenue. Notionally, if the ship was activated for a few months every year or two, the Navy would be able to utilize these ships for various operations at a minimal cost compared with traditional auxiliaries.
Crewing these ships under the ship-as-a-reservist method could be handled several ways. One such method that may entice additional mariners and address a mariner shortfall would be to create a special reservist force. During normal times, these crew would operate the containerships in commercial service. When activated, some of the crew would also be activated as reservists. As part of this special service, they could be excluded from regular reservist status and only serve aboard the containerships. The option to allow them to focus on operating these ships without committing to the full scope of naval reservist status could be useful for recruitment and retainment. Specialists for sensor, weapon, and other modular systems would likely still be required, but this approach could provide crew fully qualified on shipboard systems without an extensive Navy training pipeline. The crewing approach would be evaluated and adapted to optimize it with additional operational experience and force structure integration as needed.
Conclusion
The Navy should add capacity, capability, and improved flexibility by pursuing containerships. They would provide direct mission support, combat logistics support, and more rapid testing of new systems and technologies. Given the nature of these ships, striking an appropriate balance of capability without concentrating too much valuable hardware on a single ship would be important to identify through analysis and wargaming. But these ships would certainly add hulls in an accelerated timescale while improving U.S. domestic shipbuilding capacity, compared to ramping up conventional warship production within the tight limits of the industrial base. Pursuing containerships would leverage underutilized capacity at a fraction of typical combatant costs and deliver a unique capability on a timescale unmatched by most other options.
Tyler Totten is a naval engineer supporting Navy ship programs including EPF, LCS, and DDG(X), with a deep interest in international and specifically maritime security. He is also an amatuer science fiction writer published on Kindle. He holds a B.S from Webb Institute in Naval Architecture and Marine Engineering.
This article appears courtesy of CIMSEC and is reproduced here in an abbreviated form. It may be found in its original form here.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.
WHEN CAPITALI$M NEEDS THE STATE
Shippers Calls for Biden to Intervene to Reopen West Coast Ports
Port of Los Angeles highlights that it is open with no vessels backed up while the current labor dispute continues (Port of Los Angeles)
With uncertainty over how long and how wide the disruptions will be in the current labor unrest at the West Coast ports, the National Retail Federation and National Association of Manufacturers are now calling for the Biden administration to engage with the parties to help them finalize a new contract. The retail trade group earlier this year joined with more than 230 associations calling for the administration to help with negotiations and bring certainty to the ports. Fears are rising among the associations as the disruptions that started last Friday drags on and after a similar 24-hour disruption two months ago.
The public statements from the retails and manufacturing associations came as the labor action stretched into its fourth day with conflicting reports as to how widespread the impact was on operations. The Port of Los Angeles Tweeted, “Container terminals are open and operating today with appropriate staffing,” which got an immediate reply message “not normally,” saying appointments were still being canceled “due to no one working the cranes.”
One of the terminal operators at the Port of Long Beach closed for the day after reporting over the weekend that they were experiencing labor shortages. Daily employees from the union are reportedly not showing up for work with the individual terminals deciding if they will operate or in the case of Total Terminals International they told customers that they were canceling Monday morning appointments and planning to remain closed for at least part of the day. Port of Long Beach Executive Director Mario Cordero said in a statement that the port was open today, although two terminals elected to close. He expected the terminals would both reopen for Monday's evening shift.
Late on Monday, the Pacific Maritime Association representing the employers issued a follow-up statement saying that the ILWU continues to stage concerted and disruptive work actions that have slowed operations at key marine terminals at the port of Los Angeles, Long Beach, and elsewhere on the West Coast, including the port of Oakland and Seattle. "Union leaders are implementing many familiar disruption tactics from their job action playbook," writes the PMA. They cited "refusing to dispatch workers to marine terminals, slowing operations, and making unfounded health and safety claims."
Shippers have begun to speak out fearing the repercussions and the growing uncertainty around the current action.
“The United States ports, particularly those on the West Coast, play a critical role in the vitality of the American economy,” said David French, Senior Vice President of Government Relations for the NRF in a prepared statement. “Thousands of retailers and other businesses depend on smooth and efficient operations at the ports to deliver goods to consumers every day. As we enter the peak shipping season for the holidays, these additional disruptions will force retailers and other important shipping partners to continue to shift cargo away from the West Coast ports until a new labor contract is established. It is imperative that the parties return to the negotiating table. We urge the administration to mediate to ensure the parties quickly finalize a new contract without additional disruptions.”
In addition to the retailers, the National Association of Manufacturers is now calling for the Biden Administration to also get more directly involved. Jay Timmons, President and CEO of the manufacturers' association Tweeted, "Manufacturers implore the White House to bring negotiating parties together and reopen America’s shipping gateways on the West Coast."
The NRF had previously forecast that retailers would continue to slowly build their import volumes in the second half of 2023. Analysts have pointed to retailers' high inventory levels as one of the factors contributing to the slowdown in container volumes at the ports and U.S. imports overall.
The current disruptions at the West Coast ports come as retailers typically prepare orders and plan shipments in advance of the “return to school” retailing season and then their sales leading up to the end-of-year holidays. The Port of Los Angeles had forecast even after a labor agreement was reached it would take several months for retailers and other shippers to bring volumes back to the West Coast ports. The disruptions of the past few days, and increased uncertainty, are likely to contribute to further declines in volumes and more rerouting of shipments to the U.S. Gulf and East Coast ports.
Longshore Workers Continue to Disrupt West Coast Port Operations
Reports of disruptions continue to come in as ILWU workers fail to show up for work (file photo)
Terminals at U.S. West Coast ports are continuing to experience “no shows” and a shortage of staff with uncertainty over the current dispute between the Pacific Maritime Association and the International Longshore and Warehouse Workers union. CNBC is reporting that some terminals are advising truckers and shippers that they will be closed again on Monday, while the union and port officials continue to say operations are continuing.
CNBC reports it obtained a copy of an email sent by Total Terminal International advising truckers that it was canceling appointments for both ships at its terminals in Long Beach and Seattle. In addition, CNBC is reporting that union members have continued not to show up for work at the Port of Oakland since Friday morning.
It will be the fourth day of disruptions in the operations since ILWU members began not showing up for work. No one is officially saying they are on strike, but reports are indicating that the daily workers are not reporting to fill in as needed at the terminals leaving the terminals to operate short staff or opting to close.
The Port of Long Beach issued a statement on behalf of its Executive Director, Mario Cordero, addressing the current situation and the labor contract negotiations. “All container terminals at the Port of Long Beach remain open,” says the statement dated June 2. “As we monitor terminal activity, we urge the PMA and ILWU to continue negotiating in good faith toward a fair agreement.”
There have been no further public statements from either the union or the association representing the employers since they traded public remarks on Friday. The PMA said the union was “staging concerted and disruptive work actions,” impacting terminals ranging from the ports of Los Angeles, Long Beach, and Hueneme in southern California as well as moving north along the coast at Oakland, Tacoma, and Seattle.
The ILWU Local 13, which covers the Southern California ports, said in its statement, “cargo operations in the ports continue as longshore workers remain on the job,” while saying it was fighting for respect from the foreign-owned ocean carriers and terminal operators.
Union headquarters in its statement refuted claims that the contract negotiations had broken down. They said “We are getting there,” while saying “We aren’t going to settle for an economic package that doesn’t recognize the heroic efforts and personal sacrifices of the ILWU workforce that lifted the shipping industry to record profits.”
The Marine Exchange which oversees the movement of vessels in and out of the Southern California ports commented late on Friday that it was “a confusing day.” Captain Kip Louttit in his update said “Vessel traffic is still moving per schedules and no schedules have slipped,” while citing the media reports of terminals closing in the ports as well as at Hueneme and Oakland.
Louttit highlights that 72 vessels have registered with the management system as either being en route to the ports of Los Angeles, Long Beach, or Oakland, or as of June 1 scheduled to begin their voyage within 24 hours. The number of vessels bound for the southern California ports is 61, 10 more than the prior week, with the Marine Exchange saying it would revert to its voluntary queuing system if a backlog begins to build. Vessels would be asked to remain at least 20 miles from the coast “until they are reasonably certain they have a berthing assignment within three days.” If there is a labor shortage, the Marine Exchange is saying labor would be assigned based on the vessel's calculated date/time of arrival on the Master Queuing List for the ports, allocating labor as was done during the 2021-2022 backup.
Panama Canal’s Continuing Draft Reductions Pose Threat to Trade
In 2019, Evergreen's Triton became the largest containership by dimensions to transit the new locks (ACP file photo)
Concern is growing that a significant climate event is unfolding at the Panama Canal, with the potential of impacting one of the world’s most important shipping routes. Last week, the Panama Canal Authority (ACP) said drought conditions in the region persist, affecting water availability for passage through the locks and raising the potential of further restrictions.
The Panama Canal Authority reports that May 2023 was the driest since 1950. Climatologists are saying that this is expected to worsen due to the arrival of the El Nino phenomenon, which is associated with warmer weather conditions across the Central American region. In this case, water-saving measures will continue to be a priority for the ACP.
It is not the first time the Panama Canal has experienced these problems. In the 2015-2016 season, extreme weather conditions and efforts to reduce water consumption reportedly cost the ACP approximately $40 million in revenues. Three years later in April 2019, the ACP notified customers that it was imposing a draft restriction of 44 feet, lowing it a full foot in just one month.
While the drought conditions lessened and the restrictions were eliminated, the water-saving measures at the canal were reintroduced and have been ongoing since January. The ACP has so far announced six draft-level adjustments, forcing ships to reduce the volume of cargo they carry. Starting in April, the ACP lowered the maximum from 50 feet first to 47.5 feet and then on a sliding scale down to 46 feet as of mid-May.
These adjustments majorly affect the vessels transiting the “neopanamax” locks. Inaugurated in 2016, the new locking system made it possible for the Panama Canal to accommodate double the size of vessels it previously handled.
With the latest restrictions, neopanamax vessels are now permitted a draft of 44.5 feet (13.56m), down from the normal draft maximum of 50 feet (15.24m). A further restriction to a new draft limit of 43.5 feet (13.26m) is expected to take effect from June 25. Such significant draft reductions present a huge threat to inter-regional trades, specifically cargo from Asia to the U.S. East Coast, Europe to the South America West Coast, and the U.S. Gulf Coast to the Far East.
“With the ongoing tightening of draft regulations in the Panama Canal, smaller ships may return to favor with the carriers, as they find themselves unable to utilize the full capacity of larger vessels,” predicted Peter Sand, Chief Analyst at the Oslo-based ocean freight-benchmarking platform Xeneta. “This puts upward pressure on short-term market rates and may prompt shippers to alter their supply chains if port calls also change in line with the ship sizes,”
Some industry analysts have forecasted that the new draft regulations could force some boxships to reduce their cargo by 40 percent. Considering around 285 neopanamax ships transited the Panama Canal in April, half of which are containerships, continued draft reductions could have significant ramifications for international shipping.
The effect of the restrictions is already being felt in parts of the shipping industry. Hapag-Lloyd, the world’s first largest containership operator, recently introduced a PCC (Panama Canal Charge) of $500 per container. The surcharge took effect on June 1, levied on all cargoes loaded on Asia to U.S. East Coast routes via the canal.
Shippers and carriers both have been rerouting cargoes away from the U.S. West Coast ports for nearly a year due to the prolonged contract negotiations with the longshore union for the Pacific Coast ports. While container volumes have declined from the peaks during the pandemic, concerns are now growing as the ILWU’s members staged a no-show for their shifts on June 2, marking the second time in two months they have disrupted work at ports in California and in the latest action at other West Coast ports.
Analysts also highlight that the Panama Canal has become an increasingly important route for LNG carriers. The U.S. continues to grow its energy exports from the Gulf Coast with the canal providing a vital route to buyers in Asia for the gas exports.
AI-Controlled Autonomous Battery Powered Trucks Ordered for Felixstowe
After testing at the port, Felixstowe will now receive 100 battery-powered, AI-controlled, autonomous trucks (Hutchison Ports)
The Port of Felixstowe, the UK’s largest and busiest container port, is set to become the first port in Europe to introduce battery-powered autonomous trucks controlled by the latest AI technologies. Hutchison Ports which operates the Port of Felixstowe ordered 100 of the Q-Truck as the next step in a five-year collaboration to develop and introduce autonomous vehicles to daily commercial operations.
Hutchison reports that the order follows a tender process along with a thorough testing and evaluation process conducted at Felixstowe. They first introduced the trucks developed at Shanghai Westwell Technology Co. in 2020 at Terminal D in Laem Chabang Port, Thailand. According to the companies they have deployed 15 of the trucks as part of the efforts to make the Thailand port the first smart port in the world employing mixed mode operation between manned and unmanned internal traffic.
Westwell reports the Q-Truck completed its fourth model upgrade in 2022. Currently, it has nearly a 100-mile operating range and the capacity to transport up to 75 tons of cargo. The first batch of the trucks is scheduled to reach Felixstowe in September 2023 and they highlight that when fully deployed it will be the largest electric autonomous commercial vehicle fleet in operation.
The latest generation of the trucks uses a combination of AI and positioning data to provide fully autonomous driving. This model of truck eliminates the driver’s cab. According to Westwell, the latest model adopts a new generation of sensor fusion architecture. The Q-Truck is equipped with multiple sensors, including an industrial-grade long-range high-precision binocular AI camera, and LiDAR. By applying state-of-the-art AI algorithms with a full-stack autonomous system, the vehicle demonstrates the most advanced perception and capabilities. The Extreme Precision Position (EPP) System installed in the truck can help to achieve centimeter-level accurate vehicle positioning and high-precision control with a steering deviation within 0.5 degrees.
Westwell promotes with agile sensing, real-time analysis, self decision-making, and precise execution, the WellFMS (Fleet Management System), developed by Westwell is able to manage the fleet efficiently, dispatching tasks, reduce idle time, monitor real-time localization, handle status data of vehicles and goods. The Q-Truck is also equipped with a cloud-connected smart green energy service developed by Westwell that can assist Q-Truck in achieving autonomous battery swapping and realizing efficient recharging of the vehicle within five minutes.
Hutchison Ports highlights that the Q-Truck is part of its plan to increase efficiency and make a significant contribution to decarbonizing operations at the port. In addition to the autonomous trucks, the port is investing in battery-powered conventional tractor units, replacing and re-engineering its yard cranes, and purchasing electricity only from certified renewable sources.
Spotify will lay off 2% of it's workforce
Ashley Carman, Bloomberg News
Spotify Technology SA will lay off 2 per cent of its employees, or 200 people, primarily in its podcast division, the company said in a public blog post. Sahar Elhabashi, vice president, head of podcast business, made the announcement, saying the cuts would help the streaming service become an “optimal organization” for the next stage of its talk-content business.
Two of the company’s studios, Gimlet Media and Parcast, will eventually merge into Spotify Studios with the branding for those networks being removed from programming. The Ringer, a third studio, will continue to operate independently, a spokesperson said in an emailed comment. Additional cuts will impact finance and talent acquisition.
“Our continued success in growing the podcast ecosystem is predicated on the necessity that the Spotify Machine is always in motion,” Elhabashi wrote. “And with these changes, we will accelerate into the next chapter for podcasts on Spotify with strong discovery and podcast habits for users, thriving monetization and audience growth for creators, and a valuable, high-margin business for Spotify.”
The layoffs will be accompanied by an executive shuffle. Liliana Kim will lead current content for the reorganized Spotify Studios, and Liz Gateley will head up development. Julie McNamara will continue overseeing the organization of the studios, and Bill Simmons will remain as managing director of The Ringer and head of podcast innovation and monetization.
Among the listed shows that will remain in production are The Journal, Science Vs, Serial Killers and Conspiracy Theories.
Recently, employees have speculated internally that layoffs were in the works. A post on the anonymous workplace social media network Blind had been circulating, saying a reorganization was planned for the podcast studios. Adding to the prevailing sense of unease, the studios have yet to receive annual budgets.
In 2019, Spotify acquired Gimlet and Parcast. In 2020, it acquired The Ringer to add sports and culture content to its mix of programming. Since the initial deals, the company has gone on to spend over US$1 billion as part of a strategic effort to dominate the podcast space.
Elhabashi noted in her post that there are now 100 million podcast listeners on Spotify, representing 10 per cent growth, and that consumption has grown more than 1,400 per cent. But in recent months, the organization has undergone significant reorganizations and strategy shifts. The former Chief Content Officer Dawn Ostroff left the company in January during a round of layoffs that impacted 6 per cent of staff. While Ostroff initially focused on signing big-name talent, many have since not re-signed their exclusive deals.
Last week, Bloomberg News reported that former sportscaster Jemele Hill would leave the network. The Obamas’ production company, Higher Ground, and Ava DuVernay have also departed from the service’s podcasting roster. Now, the organization wants to focus instead on offering its programming widely across podcast platforms rather than keeping shows exclusive to Spotify.
Experts say Ottawa's 'right to repair'
consultation should prioritize consumer rights
The Canadian Press
Those in favour of creating a federal right to repair law say the government should avoid shaping such legislation according to the wishes of special interest lobbyists as Ottawa gets set to launch consultations on the issue.
Ottawa signalled in its March budget that it would study the need for legislation to ban the sale of products that aren't intended to last and reinforce consumers' ability to repair the home appliances and electronics they buy.
Alissa Centivany, an assistant professor at Western University, says national right to repair rules would be critical in the agriculture, health-care and consumer goods sectors, which often face restrictions on third-party repair technicians.
A bill introduced last week by Quebec's justice minister would ban the sale of products whose obsolescence is planned and require repair services be available at a reasonable price.
Natasha Tusikov, an associate professor at York University, says the lack of such protections in Canada places the country behind its counterparts, such as the U.S. and Australia.
She says the government's consultation should hear from local mom and pop retailers along with second-hand store shoppers who are especially disadvantaged by Canada's current framework.
This report by The Canadian Press was first published June 5, 2023.
NFI Group signs deal with TTC for up to 621 battery-electric transit buses
The Canadian Press
NFI Group Inc. says it has signed a five-year deal to build up to 621 40-foot battery-electric buses for the Toronto Transit Commission.
The contract includes a firm order for 186 Xcelsior Charge NG heavy-duty transit buses, as well as the option for up to an additional 435 of the same buses.
Financial terms of the agreement were not immediately available.
Winnipeg-based NFI says it added 261 buses to its backlog in the first quarter of 2023 based on the TTC’s initial base firm and option order.
The deal builds on a 2022 contract with the TTC for 134 Xcelsior 40-foot hybrid-electric heavy-duty transit buses and 68 Xcelsior 60-foot hybrid-electric buses.
That four-year contract includes options for up to an additional 263 40-foot hybrid-electric buses and 100 60-foot buses.
This report by The Canadian Press was first published June 5, 2023.
Flair tops Canadian airlines with average number of complaints per 100 flights: CTA
Rosa Saba, The Canadian Press
Flair Airlines Ltd. has the highest number of complaints per 100 flights of all the major airlines in Canada, according to the Canadian Transportation Agency, as airlines have had a rocky recovery year with delayed and cancelled flights.
Between April 1, 2022 and March 31, 2023, Flair saw an average of 15.3 complaints per 100 flights according to the report published in late April.
Sunwing Airlines Inc. came second at 13.8 complaints per 100 flights, and Swoop Inc. was third at 13.2. Meanwhile, WestJet had 6.6 complaints per 100 flights, Air Canada had 4.3 and Air Transat averaged 3.3 complaints.
Flair saw four of its leased planes seized in March because of overdue payments, causing hundreds of cancelled flights.
John Gradek, a lecturer at McGill University’s aviation management program, theorized that the debacle for Flair was a symptom of cash flow issues at the airline. He said Flair had overcommitted itself and passengers were complaining about issues related to compensation.
This dealt a blow to the airline’s reputation, he said. However, as demand has crept up, Gradek said Flair is charging higher fares and therefore is likely generating more revenue.
“Their cash position has improved significantly,” he said.
“They're now able to address any compensation claims that are being made by passengers, whether it's for bags or whether it's for delayed flights or cancelled flights.”
Flair CEO Stephen Jones said in a statement that the airline acknowledges its past customer service performance, and has made significant investments resulting in immediate and noticeable improvement, including investments in contact centre staff and managing customer complaints through the Better Business Bureau.
The airline's investments in contact centre staff include a dedicated team in Montreal specifically focused on handling CTA complaints, said Jones, and cases are now being resolved within a week, when in 2022 they would take three months.
"These recent developments demonstrate Flair's dedication to improving our customer service and addressing past shortcomings," said Jones.
He also said that in May more than 82 per cent of the airline's flights arrived within 15 minutes of their scheduled arrival time.
As demand for air travel has soared in the wake of the COVID-19 pandemic, airlines have at times struggled to keep up and the past year has seen headlines about cancellations, delays and chaotic airports.
According to the CTA, the average number of complaints was lower for all the major airlines for the first three-month period of its report from April to June 2022, with Air Canada seeing an average of one complaint per 100 flights, Flair seeing 9.3, Swoop seeing 6.7 and WestJet seeing 3.9.
However, as the summer travel season began last year, the airlines tended to see complaints rise. During the peak July through September summer travel season last year, Swoop jumped to 18.5 complaints per 100 flights to have the highest of all airlines, while during the October through December stretch Sunwing was the worst with 20.7 complaints per 100 flights.
Flair peaked at 20.9 between in the January to March 2023 period when it saw its planes seized, while WestJet also peaked at 10.7 during the same period. Swoop and Air Canada both peaked between July and September last year, at 18.5 and 6.3, respectively.
Sunwing’s higher complaints levels over the winter likely stem from the disruptions the airline saw during that time period, Gradek said.
The biggest airlines tended to have the highest number of total passenger complaints, even though the smaller ones are seeing higher averages per 100 flights. In the CTA's report for 2021-2022, Air Canada saw 3,245 complaints and WestJet had 3,288, while Flair had 239 and Sunwing 884.
Gradek said there’s stiff competition between Canada’s discount carriers, but there may not be room in the market for all of them.
“There is a place for discount carriers, no doubt about it,” he said. But Gradek said the real test is not how they fare during peak times, but how they do when demand is lower.
“Will they have enough cash in the bank to survive the fall?” he said. “And will they have enough cash to transition to Christmas?”
Air Canada and WestJet have also both seen recent turbulence, albeit after the CTA report’s timeline.
Air Canada cancelled and delayed flights beginning last Thursday due to technical problems, while WestJet narrowly avoided a pilot strike over the May long weekend but still had to cancel a number of flights.
